Amazon Furthers Embrace of SMBs with Storefronts

In my hometown of San Luis Obispo, California, there used to be a handful of local bookstores that were fixtures in the community. In my youth, I spent many hours wandering the aisles of Leon’s Books and The Novel Experience on Higuera Street, the main drag, back when that was a thing one did.

I’m glad to say that many small businesses on Higuera Street are still thriving, this despite an influx of large brands like H&M, Sephora, and Victoria’s Secret that has homogenized the neighborhood somewhat. Amongst these big brand stores, one can still find plenty of small furniture shops, cafes, restaurants, eyeglass retailers, and the like, all of which are testament to a strong local economy well supported by loyal customers who consider small businesses to be a part of San Luis Obispo’s distinctive character.

But the bookstores, most of them, are gone. (Here’s to Phoenix Books, the last used bookstore in town, still hanging on somehow!) Barnes & Noble moved in and did a lot of the damage, and then Amazon, as it did with so many independent booksellers in the 1990s and 2000s, sealed the fate of Leon’s and the rest by offering infinite shelves, low prices, quick shipping—all those tenets that the company has since used to create a massive e-commerce empire that has redefined retail shopping. What Amazon did to bookstores, it has since repeated on a much larger scale by decimating the market share of once-stalwart brands like Sears and Toys-R-Us.

In building that empire, Amazon found a way to re-incorporate small businesses by making its powerful shopping and shipping mechanisms available to merchants with wares to sell. The success of Amazon Marketplace is among the most significant stories in retail in the past decade, and it speaks to a concept of “local commerce” that hasn’t really been assimilated into the conversations we typically have on that topic.

Now Amazon has launched Storefronts, a new entry point for SMB product offerings that attempts to showcase small businesses and the people behind them. Featuring “Curated Collections” in product categories like handmade products, jewelry, pet supplies, grocery, and books, Storefronts comes across a bit like Etsy, but it’s more like a new skin on the typical product searches we’ve become used to as Amazon shoppers, where many search results come from Marketplace sellers rather than Amazon itself. In fact, as noted on the Storefronts landing page, half of everything sold on Amazon comes from SMBs.

It makes sense. More than half of all product searches start on Amazon today, surpassing Google and making Amazon the world’s biggest search engine for retail. Merchants want to be found in Amazon searches, and Amazon, in order to maintain its dominance, wants to fulfill every possible consumer desire, whether through its own offerings or those of Marketplace. Indeed, merchants and brands competing to rank in Amazon searches have given rise to a new branch of SEO devoted entirely to optimizing Amazon product titles, photos, descriptions, and the rest.

What Amazon has done is create a channel for the entrepreneurial impulse of small business owners that would appear to sidestep local commerce completely. It’s easy to imagine that those same bookstores Amazon drove out of business 20 years ago would never dream of opening literal storefronts today, but would simply choose to sell through Amazon’s new virtual Storefront.

But has local really been removed from the equation? After all, scores of local business owners sell on Marketplace today, a fact Amazon highlights in Storefronts by calling out the home state of each seller it profiles. And locality is more than a marketing angle; it’s a factor in many purchase decisions where look, feel, fit, taste, and other factors can’t be easily replicated online.

Amazon’s recognition of this is well illustrated by its new retail store Amazon 4-star, located in New York’s SoHo neighborhood, where everything for sale has a 4-star or higher Amazon rating or is otherwise trending on the company’s website. With features like “Trending Around NYC,” Amazon is catering somewhat to the store’s actual location, but for the most part, the physical store is just a place to showcase popular products.

Could Amazon launch a nationwide or even a global chain of retail stores with a similar intent? The company has already established a retail footprint with the acquisition of Whole Foods, so the idea isn’t so far-fetched. Put that together with the millions of SMB products Amazon sells, and a picture emerges of redistributed local commerce, where buying and selling both happen locally—but not necessarily in the same place.